FACT CHECK: Economic Policy Institute Analysis of the CR: What’s One More Wildly Inaccurate Prediction?
Wednesday, February 16, 2011
The Economic Policy Institute (EPI), a union-funded organization, has estimated that the cuts contained in the CR would result in a loss of 994,000 jobs. This analysis is based on a highly simplified economic analysis that has repeatedly been demonstrated to be wildly inaccurate.
EPI’s Jobs Analysis – Even the White House Thinks It Is Wrong
- EPI’s track record on forecasting the impact of policies on job creation is even rejected by the White House.
Romer/Bernstein Analytical Methods – Wrong Before, Wrong Now
- EPI’s analysis uses the same analytical methods applied by the Administration in its infamous Romer/Bernstein report to help sell the flawed 2009 stimulus bill. The Administration and EPI apply a simple multiplier to estimate the impact of changes in government spending on GDP and job growth.
- This is the same analysis that the Administration used to project that as a result of the stimulus plan payroll employment would be 137.6 million at the end of 2010. As payroll employment at the end of 2010 was 130.2 million, the analysis was off by “only” 7.4 million jobs.
- This is the same analytical method that EPI used to claim that stimulus would create up to 5 million jobs over the two years of 2009 and 2010.
- EPI’s analysis couldn’t have been more wrong. Instead of adding up to 5 million jobs in 2009 and 2010, the economy actually lost 3.3 million jobs.